Sunday 26 January 2003

Pic of the day: Dark clouds looming, but for who? Some dangers are more subtle than others ...

War and debt

It seems that time is running out for Iraq, and the USA is eager to go to war. I have no love for the bloodstained regime of Iraq (as if my opinion mattered), but there is one small point to make. Wars are expensive. Offending your friends and allies is very very expensive. And the USA doesn't have any money.

On the contrary, the entire country is submerged in debt. The government, the corporations, the citizens. The nation cannot even afford to pay the interest on its current debt, but has to borrow more to stay afloat. This does not seem like a nation capable of fielding wars on the other side of the globe. And it most assuredly doesn't seem like a nation that should insult its creditors.

Even should a quick war in Iraq bring the price of crude oil down by 30%, as some believe, the USA will still need to borrow money. So it might be a good idea to show a little humility now and again. After all, as the Bible says, "the borrower becomes a servant of the lender". There hasn't been too much servant attitude lately.

Creditors can run out of patience too. It's more subtle, but pretty dramatic. What will you do, dear reader, if there's not new credit to get? Have you planned ahead so you are ready to handle it?